Payment companies drive customization & hinterland expansion
In an exclusive chat Ketan Doshi, MD & CEO, PayPoint India & Nipun Jain, CEO, RapiPay discuss the current scenario & opportunities for payment companies in India:
Ravi Lalwani: In which regions of the country are you seeing maximum growth?
Ketan: We are witnessing strong growth across all the regions of the country; the demand is higher in the eastern and north-eastern states. We are also growing rapidly in some other states like Chhattisgarh, Uttarakhand, Odisha, Andhra Pradesh, and Telangana. In terms of types of territories, the semi-urban and rural locations have the maximum need for banking and payment-related services.
Nipun: We are doing well in all regions and have grown by more than 100% over last year. A couple of states which have done better are in North – J&K, HP & UP, South – Tamil Nadu, West – Maharashtra and in East – Bihar, Jharkhand & Tripura.
What ticket sizes are showing the maximum growth?
Ketan: We are seeing growth in small-ticket transactions with the average size being i n the `30005000 range. However, over the years, the ticket size is increasing, and the number of transactions is also increasing exponentially.
Nipun: We are witnessing an overall growth in ticket size by 12-15% in cashout business (micro-ATM and AEPS) and domestic money transfer. At the business level, the ticket size is `4000. For microATM transactions, it is around `3800 and for Aadhaar Enabled Payment System (AEPS), it is `2800.
How have you customized your payments solution for different channels?
Ketan: We always customize our solutions and services to meet the specific needs of people. We have been adding new services to meet the requirements of the under-served masses. As a result, we have a very large bouquet of services consisting of various banking products, payment products, ticketing services, insurance, loans, online booking of merchandise, etc. Customization and up-gradation are part of a continuous process in our company. With the increasing demand for various services, we have customized our products and created a robust and easy to integrate solution for all kinds of services. For the service providers who want to reach out to the hinterlands, ours is a plug-and-play solution that works real-time with 99.9% uptime.
Nipun: RapiPay is a fintech company in the assisted payments category. Our payment solutions are AEPS, microATM and POS machines, and Pre-Paid Instruments (PPI).
AEPS solution is mainly preferred by small retailers whose customers use biometric and Aadhaar numbers for their cash withdrawals or payments. It is popular and very successful in rural India.
Micro ATM requires a debit card for cash withdrawal. Medium to large size retailer prefers micro-ATM devices. It’s more po pular in semi-rural and urban markets.
Our micro-ATM doubles up as MPOS machines and is used by mid-size retailers and retailers accepting card payments.
Please name some of your recent bank partners.
Ketan: Currently, PayPoint is in partnership with State Bank of India, Bank of Baroda, ICICI Bank, PayTM Payment Bank, Fino Payment Bank, NSDL Payment Bank, TJSB Bank, Yes Bank, and Axis Bank.
Nipun: Today RapiPay has a strong relationship with most of the banks for various services it offers to the consumers. We are already a corporate business correspondent to more than 7 banks and depending on the type of products/services offered, we continue to partner with leading banks, NBFCs, and other related financial players. Our focus is to work with banking partners in improving the customer experience at t he g r o und l e v e l by e nsuri ng successful and transparent transactions and services.
How a r e y o u d e e p e n i n g y o u r engagement with banks?
Ket a n : Ov e r the years, the p a r t n e r s h i p b e t ween b a n k s a n d PayPoint has become stronger, thereby, accelerating financial inclusion in a big way. PayPoint has been able to take the
banking services of various banks to the most remote places, be they in Arunachal Pradesh or Mizoram or any other state in the North-East or even in the naxal infested areas of Chhattisgarh, Madhya Pradesh, Maharashtra, Jharkhand, and Odisha. Our expertise in expanding the distribution network to the farthest locations in the most difficult terrains has enabled the banks to take banking and social security services to the hitherto financially excluded people living there.
We have already opened around 3.5 million bank accounts which we service almost exclusively at our outlets for most of their banking needs. Recently, we have started a loan lead generation service for many banks and NBFCs.
Nipun: Fintech companies and banks complement each other. We extend banking and financial services to end consumers by partnering with some of the leading Indian banks. They are our banking partners for AEPS and microATMs. Our transactions volume and value have grown by more than 200% in the last year. A healthy growth like this has strengthened our relationship with the banks and they are excited about the future potential of the business with us.
We have worked closely with banks in ensuring smooth onboarding of channels (today more than 85% of our channels are onboarded in 5 minutes), ensuring transaction speed while building scale, being compliant with the guidelines, and helping banks in faster resolution of grievances.
What are the most common problems in reconciliation and settlement, and how is the company fixing them?
Ketan: As we have more than 125 service providers partnering with us, reconciliation and settlement are crucial functions for us. We have a 3-way reconciliation system that is largely automatic and computerized. The discrepancies are captured quickly before the settlement process begins.
Nipun: At our scale, the high volume of transactions is the biggest problem faced during reconciliation and settlement. To mitigate the issue, daily reconciliation is important. It helps in minimizing the financial losses due to any bugs or errors in the product. We are automating the reconciliation process, which is not that easy but is a great way to handle a huge volume of transactions like ours.
What changes have you made in your IT infrastructure in the last 12 months to enhance scalability and business continuity?
Ketan: Changes in IT and its up gradation are an ongoing process at PayPoint. Cutting-edge technologies, s uch as arti f i ci al intelligence and machine learning, have helped us in analyzing customers’ requirements and quick digital adoption across the country. We have used boat system in Assam, during floods, one of the Bank Mitras of PayPoint got onto a local boat carrying all his belongings, including a laptop, printer, biometric device, dongle, etc. Every morning for over 6 kilometres, he sailed across the Brahmaputra River to cater to the banking needs of the poor people trapped in inundated villages. The efforts were applauded by the government of Assam and government of India.
System has been implemented to resolve queries in real-time without any human intervention. MIS is extremely important to us and therefore, we have recently upgraded it by adopting the latest and most versatile MIS tool. A robust, quick, and easy-to-use KYC system is of vital importance to us. Therefore, we have put in place an XML-based Aadhaar eKYC solution that gets us the authenticated KYC data in seconds.
Nipun: Technology is the backbone of our business. Our IT infrastructure has grown manifold in last year. Our team size is 3 times what it was last year, and our IT team has been constantly working towards providing a great product experience for our consumers and partners.
As we are on a growth trajectory and have plans to launch more products, we have reorganized our IT teams on basis of business verticals, and this is further bifurcated into the development team and maintenance team (basis the business maturity). Also, to ensure that there is cross-functional knowledge exchange and better team synergies, these teams are made to be fungible. Our tech stack is also being further developed and strengthened to ensure commonality, wherever possible, across business functions to ensure convenience to the consumers.
Some of the new initiatives in technology we have introduced to make our systems robust while scaling up the business are:
● AI-based facial recognition and liveliness check, face matching of profile pic with KYC Video.
● Automated Credit Processing: Rulebased and scorecard-based risk profiling and underwriting (for RapiPay’s digital lending vertical).
● Weightages calculation for score carding, knock out and deviation rules.
● Dynamic business rules and workflow engine.
● Machine learning-based fraud detection and identity/risk management.